“How to calculate net value of RRSP” is an instructional phrase that guides individuals in determining the worth of their Registered Retirement Savings Plan (RRSP). Suppose Emily contributes $5,000 to her RRSP and earns a 5% return over five years. To calculate the net value, she would add the interest earned ($1,250) to the initial contribution, resulting in a net value of $6,250.
Understanding the net value of an RRSP is crucial for financial planning. It helps individuals assess their retirement savings progress and make informed decisions about future contributions. Historically, RRSPs have been a valuable tool for Canadians to save for retirement, with the first RRSP being established in 1957.